A Pause in Ethanol Contribution to US Energy Independence

Almost forgotten amidst the current excitement over rising US tight oil production, a critical US policy instrument towards US energy independence has been the promotion of ethanol blended gasoline. Energy Independence and Security Act (EISA 2007) included provisions for rising annual average ethanol blending volumes derived from corn, as well as next-generation feed sources. Since 2007, the volume of ethanol blended into US gasoline production has jumped by 121%, to a year-to-date average 826 kbpd. Domestic ethanol output has stalled this year, however, as the severe US drought drove corn prices sharply higher, punishing the margins from ethanol production. This drop in supply has reversed the country’s net export position in ethanol, prompting a rise in ethanol imports. Download here